Young entrepreneurs make pitches while classmates decide on actual investment.
by Elaine Cole
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Topics: Neeley School of Business,Research & Discovery
by Elaine Cole
Austin Patry ’17 had an idea for a business. It was so clever that students in charge of the Shaddock Venture Capital Fund invested a total of $13,000 in two pitches for his plan.
The Shaddock Venture Capital Fund began in 2015 when Dallas entrepreneur Bill Shaddock ’73 made a $250,000 donation to launch the student-run fund.
The students who make the investment decisions are in Entrepreneurial Venture Deals, a course co-taught by Les Kreis ’94, founder of Steelhead Capital Management in Fort Worth, and Michael Sherrod ’10 MBA, the William M. Dickey Entrepreneur in Residence at TCU. The pitches are made twice a semester in fall and spring, and students can give out a total of $10,000 per semester.
“An entrepreneur in America cannot be successful without private equity, whether from friends, family, venture capitalists, angel investors or crowdfunding,” Sherrod said. “This class is helping them experience how that works.”
Patry, an entrepreneurial management major, used the startup funds for a business idea he had when a valet service couldn’t find his keys. He developed Voilà Valet, a direct communication and payment app designed to revolutionize the way valet service works.
The idea is to deliver real-time data to the valet service and the customer. The valet company would receive a readout of each employee’s shift times, location and sales. Employees would get tips straight to their bank accounts. Customers could access live information on the location of their cars, pay for the service and tip drivers without opening their wallets.
But Patry needed money to pay programmers to develop the app. In pitching the idea to his peers who manage the Shaddock Venture Capital Fund, he showed them sketches for the app’s dashboard, walked them through how the app works and asked for seed money. The group gave him the money.
Christine Clutterbuck was one of the students in the course who voted to fund Patry’s idea. She leveraged the in-class experience of evaluating business proposals, competitors and profit potential to create her own original business plan.
Clutterbuck, a senior entrepreneurial management major, came up with an idea for virtual-reality entertainment to help ailing children combat the boredom, anxiety and depression that come from spending weeks or months in a hospital room. She drew on her experience as a child who spent time in hospitals with Crohn’s disease.
“We can give them the chance to travel the world and do what they enjoy even if they can’t physically be there,” Clutterbuck said of the possibilities of in-hospital virtual reality.
Classmates Mathew DeBilio ’17 and Kendall Records ’17 helped her create RelieVR, a community-based virtual-reality platform that delivers engaging experiences for children in hospitals.
When testing the idea on focus groups at Cook Children’s Medical Center, “we met so many kids who needed an outlet,” DeBilio said. “One girl was spending hours looking at Google Maps. We knew we had something that could make a real difference in their lives.”
Clutterbuck, DeBilio and Records refined their plan, pitch and prototype with the help of the Neeley Entrepreneurship Center and TCU Idea Factory. They then requested and ultimately received research money from the Shaddock Venture Capital Fund.
“Going in front of student investors gave me confidence to go in front of angel investors someday,” Clutterbuck said. “We learned so much about ourselves, the way that we work together and how serious we wanted to be about the business.”
“It’s a lot easier to give away someone else’s money than your own, but it’s harder than I thought it would be,” Joel Huffman ’17 said of his experience in the course. “The analysis is harder. … You have to balance between skepticism and optimism.”
Huffman was one of the decision-makers for the 12 teams that made pitches in April 2017. He said he considered the feedback he would want were the roles reversed. “I didn’t want to just say what’s negative, but more like, ‘Maybe you can pivot this way. What else can you do with this product? How else can you scale it?’ Maybe I asked something they hadn’t thought about.”
Asking for money goes beyond that first pitch. After the initial presentation, the student investors choose the best ideas and ask the presenters to come back for a deep dive. The class then discusses, negotiates and votes.
“We try to avoid groupthink, be fair and hear alternate views,” Huffman said. “We discuss what we’d like to see, what they want to use the money for. Do they really need that much? Should we encourage them to use it for something else?”
The key is understanding both the entrepreneurship and finance sides of business — raising money and investing money.
“I knew about ownership and equity, but this process is completely different,” Huffman said. “This is more: Now that we have that information, how can we apply it? What does it mean? How do we analyze and make decisions on that information? It’s not something students normally get exposed to.”
Sherrod said the roles of entrepreneur and investor give the students key insights into how businesses operate.
“The most important thing we give TCU students is a balanced view of how theory and practice work together,” he said. “You can practice all day long, but you need the theoretical foundation coupled with the actual experience of engaging in real transactions and decisions.”
“You can watch Shark Tank, but unless you are starting your own business or have money to invest, it’s hard to know what it’s truly like,” Huffman said. “Now I know.”
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